Friday, May 23, 2014

Dr. Dre Loses $3 Million Claim in the Suge Knight Bankruptcy Case

Andre Young (a/k/a "Dr. Dre") was in the news last week when Apple announced that it was buying his Beats headphone company for more than $3 billion. Media reports estimate that Dr. Dre will net nearly $800 million from the deal. So, I guess he wasn't too upset when U.S Bankruptcy Court for the Central District of California denied his motion for a $3 million administrative expense claim in the Death Row Records/Suge Knight bankruptcy case.

By way of background, Death Row Records ("DRR") and Suge Knight filed separate bankruptcy cases in 2006, which were subsequently consolidated. The consolidated bankruptcy case is still pending. DRR has continued to sell music the whole time, including music on which Dr. Dre claims that he is due royalties. In fact, Dr. Dre claimed that he was due nearly $3 million for post-petition royalties.  

He filed a motion for allowance of an administrative expense claim. The court had several problems with Dr. Dre's motion. First, the court took issue with the affidavits used to support the claim for $3 million. To make a long story short, the court found that Dr. Dre could not prove his damages because the affidavits were full of hearsay and speculation. The court also noted that Dr. Dre has previously made claims for royalties in this same case, which were denied, so, for reasons of claim preclusion and issue preclusion, the motion for allowance of an administrative expense claim was denied.  

HERE is a copy of the order if anyone is interested.

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